Intel CEO Retirement: Can Successor Muscle In on ARM, M2M?

Intel (NASDAQ: INTC) CEO Paul Otellini’s surprise decision to retire early, effective May 2013, signals continued challenges for the chip giant. Indeed, Intel is still struggling to master the shift from on-premises PCs and servers to mobile devices and cloud computing. Even as Intel bets heavily on Windows 8 ultrabooks, the company remains an also-ran in the chip market for tablets and smartphones, home of ARM Holdings (NASDAQ: AMRH). Instead of lamenting missed opportunities, The VAR Guy thinks Intel’s next CEO must huddle up with Microsoft, jump on Machine to Machine (M2M) computing, and crystallize the Intel Hybrid Cloud strategy fast. Here’s why.

“comes as Intel, which manufactures the microprocessor chips used in most computers, faces slumping demand for PCs and a battle to move its franchise into the faster-growing market for mobile devices—a major priority of Mr. Otellini’s that has so far showed limited results. Intel has recently managed to place some chips in a handful of smartphones, but faces an uphill battle in a market where most chip makers use technology licensed from ARM Holdings PLC.”

But Intel’s worst fears don’t end there. ARM also has server aspirations. And some server makers are testing ARM processors for their cloud strategies. Michael Dell, for one, sounds like he remains loyal to the x86 server market but even he concedes that Dell is putting ARM-based servers to the test for cloud computing.

Back at Intel, Otellini from the end of 2005 through the end of 2011 lifted annual revenues to $54 billion from $38.8 billion. Also, Intel made $23.5 billion in dividend payments during Otellini’s tenure. But therein resides the challenge: Intel has been turning into an income company rather than a growth company. The chip giant has not been able to extend Moore’s Law dominance from PCs into smartphones and tablets.

Part of the problem involves Microsoft, which was late to the tablet market with a touch-optimized operating system. And the recent Windows 8 launch, while promising, doesn’t seem to be shifting the balance of power away from Apple, ARM and Google in the mobile world.

Six Intel CEO Priorities

Intel will conduct and internal and external search for its next CEO. What should the focus include? Here are The VAR Guy’s top six recommendations:

1. Closer Coordination With Microsoft — Where Appropriate: Heck, The VAR Guy is not suggesting that we need to go back to the glory days of Wintel. But let’s be honest: The recent Ultrabook and Windows 8 initiatives were poorly coordinated during much of 2012. A few examples:

Intel and its PC partners first promoted consumer-oriented Ultrabooks running Windows 7. Some of those systems wound up in businesses. And the systems are not easily managed, which means the initial Ultrabook user experience was less than stellar.

Intel and its PC partners then launched business-oriented Ultrabooks running Windows 7 — only a few weeks before Microsoft’s Windows 8 launch. And now finally, Ultrabooks running Windows 8 are arriving.

Closer work between Intel, Microsoft and PC vendors would have made it much easier for resellers to promote corporate-class ultrabooks to customers from the start.

2. Figure Out Big Data and Machine to Machine (M2M) Communications Fast: Let’s face it… Intel missed the early smartphone and tablet waves. Even as the chip giant tries to build momentum in those markets, it’s critically important for Intel to also catch the next waves — namely, M2M opportunities built atop the Big Data hype cycle.

3. Figure Out Intel Hybrid Cloud: The chip giant has “sort of” promoted Intel Hybrid Cloud for about two years. Instead of dabbling in this market, it’s time for Intel to go All In or Get Out. As part of Intel Hybrid Cloud, the company has been promoting an App Up service that links on-premises servers to cloud services.

Some VARs and MSPs sort of know about App Up and Intel Hybrid Cloud. That’s not good enough. Time for Intel to really educate the channel about the strategy.

4. Simplify the Intel Software Message: Check out Intel Developer Zone and you’ll see software developer resources for Ultrabook, Android, Business and Servers. Um… does anybody else remember something called “the PC”? How the heck can Intel market to developers without mentioning the PC market? And what about simplifying the message to ensure developers can write once and run everywhere — across smartphones, tablets, PCs, servers and cloud environments?

5. You’re An Engineering Company: What exactly made Intel great? It’s time for Intel to celebrate Moore’s Law again. Then, communicate what that means for computing in 2013, 2014, 2015 and beyond. Then, describe why Intel engineering will position VARs and MSPs to cash in on the next IT waves.

6. Leverage McAfee: So you want to get into the smartphone and tablet market in a big way? Perhaps the answer is to promote the absolute most secure mobile technology available — leveraging a healthy dose of McAfee security.

Who will next lead Intel? Instead of hiring a radical leader from outside the company, The VAR Guy hopes Intel’s next CEO comes from inside the halls of the the engineering company. There’s no need to radically change the company. Instead, it’s time for Intel to return to its roots as a dominant engineering-driven innovator.

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